June 22 (BusinessDesk) - New Zealand shares rose, led by Xero which was spurred on by a rally in tech stocks on Wall Street, while blue chip stocks including power company Contact Energy and dual-listed listed bank Westpac Banking Corp also gained.
The S&P/NZX 50 Index gained 36.58 points, or 0.5 percent, to 7,563.69. Within the index, 31 stocks rose, 15 fell and four were unchanged. Turnover was $150 million.
Wall Street's tech-heavy Nasdaq Composite rose 0.7 percent in New York yesterday, boosting demand for local accounting software developer Xero which was the best performer today, up 2.9 percent to $26.02. That was just shy of the three-year record $26.25 the stock reached earlier this month, and added to a 45 percent this year, bolstered in mid-May when the firm said it was moving closer to its first ever profit as customer numbers continue to swell.
"The tech sector in the US did a little better so Xero has followed that lead and tracked higher, it's had a reasonable few months of performance," said James Lindsay, senior portfolio manager at Nikko Asset Management. "I suppose the transition to people understanding that cashflow breakeven and earnings are getting closer, it was up 15 percent last month and it's added another dollar or so since then."
Contact rose 2.3 percent to $5.29, Westpac gained 1.6 percent to $31.70, and Spark New Zealand advanced 1.6 percent to $3.80.
"There have been some relatively interesting moves today, driven by offshore market moves - we've had, on very little announced news, some quite strong returns," Lindsay said. "A few of the names in the leaders have been related to yield stocks, we've had Contact, Westpac and Spark strongly bid today, but on the news front it's relatively benign."
SkyCity Entertainment Group was the worst performer, dropping 1.8 percent to $4.27, while Vista Group International fell 1.3 percent to $5.92 and Z Energy dropped 1.3 percent to $7.45.
Fonterra Shareholder's Fund gained 0.2 percent to $5.95. Fonterra Cooperative Group expects to collect 3 percent more milk from New Zealand farms this season as higher milk prices encourage farmers to lift production. The cooperative said today that last season's New Zealand milk collection was impacted by wet conditions through spring, however more favourable weather conditions through summer lifted production but cooler conditions in May dented collections in the South Island.
Property For Industry was unchanged at $1.64. The industrial property investor's managers will reap a $42 million payday after shareholders voted to internalise its management contract. At the company's annual meeting in Auckland this morning, 94.4 percent of votes cast were in favour of the motion to internalise. Management rights have been owned by PFIM Ltd since about 1994, with PFIM subcontracting its management role for Property for Industry.
Outside the benchmark index, Seeka was unchanged at $5.10. The largest kiwifruit grower in New Zealand and Australia has confirmed its guidance for a 15 percent drop in operating profit in 2017 as weaker-than-expected kiwifruit crops offset growth from its avocado sector.
The company warned 2017 operating profit may be up to 15 percent lower than the record $7.8 million in 2016, with New Zealand Hayward kiwifruit volumes forecast to be between 20 and 25 percent lower than the previous year. Today, it confirmed that guidance "albeit with the expectation that the earnings will be at the 15 percent reduction end of the range" at $6.6 million.
NZME shares rose 2.4 percent to 84 cents after the media group told shareholders at today's annual meeting that a High Court appeal against the Commerce Commission's opposition to a planned merger with rival Fairfax New Zealand will be heard in October.
(BusinessDesk)